{"url_path":"/sec/otex/10-q/2026/item-3","section_key":"item-3","section_title":"Item 3 Quantitative and Qualitative Disclosures About Market Risk","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-02-05","source_url":"https://www.sec.gov/Archives/edgar/data/1002638/0001002638-26-000021-index.html","accession_number":"0001002638-26-000021","cik":"0001002638","ticker":"OTEX","issuer_name":"OPEN TEXT CORP","edgar_url":"https://www.sec.gov/Archives/edgar/data/1002638/0001002638-26-000021-index.html","primary_entity_key":"0001002638","primary_entity_name":"OPEN TEXT CORP"},"word_count":834,"has_tables":true,"body_markdown":"Item 3. Quantitative and Qualitative Disclosures About Market Risk\n\nWe are primarily exposed to market risks associated with fluctuations in interest rates on our Revolver, Acquisition Term Loan and foreign currency exchange rates.\n\nInterest rate risk\n\nOur exposure to interest rate fluctuations relates primarily to our Revolver and Acquisition Term Loan.\n\nAs of December 31, 2025, we had an outstanding balance of $2.167 billion under the Acquisition Term Loan. Borrowings under the Acquisition Term Loan bear a floating interest rate of 1.75% plus Term SOFR (as defined in the Acquisition Term Loan). As of December 31, 2025, an adverse change of 100 basis points on the interest rate would have the effect of increasing our annual interest payment on the Acquisition Term Loan by approximately $21.7 million, assuming that the loan balance as of December 31, 2025 is outstanding for the entire period (June 30, 2025—$21.9 million).\n\nFor more information regarding the impact of SOFR, see “Stress in the global financial system may adversely affect our finances and operations” included within Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2025.\n\nForeign currency risk\n\nForeign currency transaction risk\n\nWe transact business in various foreign currencies. Our foreign currency exposures typically arise from intercompany fees, intercompany loans and other intercompany transactions that are expected to be cash settled in the near term and are transacted in non-functional currency. We expect that we will continue to realize gains or losses with respect to our foreign currency exposures. Our ultimate realized gain or loss with respect to foreign currency exposures will generally depend on the size and type of cross-currency transactions that we enter into, the currency exchange rates associated with these exposures and changes in those rates.\n\nWe have hedged certain of our Canadian dollar foreign currency exposures relating to our payroll expenses in Canada. Based on the CAD foreign exchange forward contracts outstanding as of December 31, 2025, a one cent change in the Canadian dollar to U.S. dollar exchange rate would have caused a change of $0.7 million in the mark-to-market valuation on our existing foreign exchange forward contracts (June 30, 2025—$0.7 million).\n\nAdditionally, in connection with the Micro Focus Acquisition, in August 2022, we entered into certain derivative transactions to meet certain foreign currency obligations related to the purchase price of the Micro Focus Acquisition, mitigate the risk of foreign currency appreciation in the GBP denominated purchase price and mitigate the risk of foreign currency appreciation in the EUR denominated existing debt held by Micro Focus. We entered into the following derivatives: (i) three deal-contingent forward contracts, (ii) a non-contingent forward contract, and (iii) EUR/USD cross currency swaps. These instruments were entered into as economic hedges to mitigate foreign currency risks associated with the Micro Focus Acquisition. In connection with the closing of the Micro Focus Acquisition the deal-contingent forward and non-deal contingent forward contracts were settled and we designated the 7-year EUR/USD cross currency swaps as net investment hedges.\n\nBased on the 5-year EUR/USD cross currency swaps outstanding as of December 31, 2025, a one cent change in the Euro to U.S. dollar forward exchange rate would have caused a change of $5.8 million in the mark-to-market valuation on our existing cross currency swap (June 30, 2025—$5.9 million).\n\nBased on the 7-year EUR/USD cross currency swaps outstanding as of December 31, 2025, a one cent change in the Euro to U.S. dollar forward exchange rate would have caused a change of $7.7 million in the mark-to-market valuation on our existing cross currency swaps (June 30, 2025—$7.7 million).\n\n71\n\n[Table of Contents](#ia3aa1934741a4fd6b5be0892c1a28106_7)\n\nForeign currency translation risk\n\nOur reporting currency is the U.S. dollar. Fluctuations in foreign currencies impact the amount of total assets and liabilities that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. In particular, the amount of cash and cash equivalents that we report in U.S. dollars for a significant portion of the cash held by these subsidiaries is subject to translation variance caused by changes in foreign currency exchange rates as of the end of each respective reporting period (the offset to which is recorded to Accumulated other comprehensive income (loss) on our Condensed Consolidated Balance Sheets).\n\nThe following table shows our cash and cash equivalents denominated in certain major foreign currencies as of December 31, 2025 (equivalent in U.S. dollar):\n\n(In thousands)\nU.S. Dollar\n\n Equivalent at\n\nDecember 31, 2025\n\nU.S. Dollar\n\n Equivalent at\n\nJune 30, 2025\n\nEuro$140,891 $266,726 \n\nBritish Pound137,869 153,293 \n\nIndian Rupee\n126,891 104,609 \n\nSwiss Franc37,559 38,555 \n\nOther foreign currencies114,703 157,294 \n\nTotal cash and cash equivalents denominated in foreign currencies557,913 720,477 \n\nU.S. Dollar713,461 436,019 \n\nTotal cash and cash equivalents $1,271,374 $1,156,496 \n\nIf overall foreign currency exchange rates in comparison to the U.S. dollar uniformly weakened by 10%, the amount of cash and cash equivalents we would report in equivalent U.S. dollars would decrease by $55.8 million (June 30, 2025—$72.0 million), assuming we have not entered into any derivatives discussed above under “Foreign Currency Transaction Risk.”"}